Back when CARES act came out, businesses had to choose whether they went the route of obtaining the PPP loan or applying for the Employee Retention Credit (ERC). In most cases, businesses were better off taking the PPP loan as that provided a better benefit. The CARES act did not allow you to take both the PPP and ERC.
To freshen you up on the ERC as established in the CARES act, you were able to get up to 50% of $10,000 in wages as a tax credit (basically $5,000 per employee as a tax credit offset and refund ) on your payroll taxes assuming you fell into one of two buckets. The first is that your business was shut down or had reduced operations due to COVID safety protocols or you had a decline in gross receipts of 50% quarter over quarter. Every single brewery that had a taproom qualified for this (and in general continues to qualify for this).
The COVID Stimulus Bill make some significant changes to the ERC that are absolute game changers.
The first is that you can obtain both the PPP and the ERC. The only caveat is that if you used payroll costs for PPP loan forgiveness, you cannot use those same dollars for the ERC. THIS IS A BIG DEAL!!!!!!!!
Due to how this was written in the law, your brewery might be able to retroactively apply for this credit as early as Q3 2020 (which means amending your 941) and can apply for it in Q4 2020. IF YOU THINK THIS APPLIES TO YOU, PLEASE REACH OUT. We are working with Gusto to get this going and will let you know when we can make this magic happen.
The second major change is supercharging the ERC for Q1 and Q2 2021. Starting in 2021, your credit increases up to 70% of $10,000 of wages per quarter per employee ( which results in an up to $7000 credit per employee per quarter). This means that you can have up to $14,000 per employee in tax credits in 2021. Given the high threshold, that may very well mean you might be better off taking the ERC as opposed to PPP 2.0, or at the very least is a very nice consolation prize if you do not qualify for PPP 2.0.
This means a careful and close evaluation is required before jumping in and getting the PPP 2.0 loan.